Your Path to Precious Commodities

One thing that has been clear about ETFs is that new product innovation will allow individual investors to access parts of the market that had not been easily available. The folks at PowerShares, in conjunction with Deutsche Bank, have rolled out a couple of products so far, and on Friday they rolled out seven new commodities-based ETFs.

Here are the seven:

• PowerShares DB Agriculture Fund (DBA Quote)
• PowerShares DB Base Metals Fund (DBB Quote)
• PowerShares DB Energy Fund (DBE Quote)
• PowerShares DB Oil Fund (DBO Quote)
• PowerShares DB Precious Metals Fund (DBP Quote)
• PowerShares DB Silver Fund (DBS Quote)
• PowerShares DB Gold Fund (DGL Quote)

As evidenced by the names, some of the funds (Oil, Silver and Gold) invest in single commodities, and those charge a 0.50% expense fee. Some are multi-commodity funds (Agriculture, Base Metals, Energy and Precious Metals) and charge a 0.75% fee. The various funds will use futures contracts to create the exposure. All of the funds employ something called the optimum yield formula, which is an attempt to minimize the consequence of price distortions caused by rolling to new futures contracts, known as contango, as current ones expire. ...